Morgan Stanley: U.S. stocks could fall another 8% unless the White House or the Federal Reserve intervenes

ChainCatcher news, according to Jinshi reports, the team of strategists at Morgan Stanley led by Mike Wilson believes that unless the White House abandons its tariff plans or the Federal Reserve signals easing, investors should prepare for the S&P 500 index to drop another 7% - 8%. They stated in a report to clients earlier on Monday that the next support level for the index—where buyers are likely to step in—is currently at 4700 points. They added that at this level, valuations provide better support, as this point is close to the 200-week moving average, which is a long-term indicator of technical trends. Last Thursday, Morgan Stanley had set 5100 points as a key level, but the bank updated the support level on Monday, partly because stock futures indicated that the sell-off had not eased. S&P 500 futures suggest a decline of over 3%, while Dow Jones Industrial Average futures plummeted by more than 1200 points.

The Trump administration showed no signs of backing down in comments made last Sunday, while Federal Reserve Chairman Powell stated last Friday that the Fed would take a wait-and-see approach due to the unclear economic impact of the tariffs.